Which of the Following Statements Is Not True About Materiality

question 41

Multiple Choice

Which of the following statements is not true about materiality judgments?

• A) The auditor's consideration of materiality is influenced by the auditor's perception of the needs of users of financial statements.
• B) The auditor considers materiality only in relation to classes of transactions, account balances, and disclosures.
• C) Materiality judgments are used to help the auditor gather sufficient appropriate evidence about whether the financial statements are free of material misstatement.
• D) Materiality decisions differ from one audit client to another.

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Definitions:

Resources

Assets, materials, and inputs needed for the production of goods and services, including natural, human, and capital resources.

Production

The process of creating goods and services from various inputs like labor, technology, and raw materials.

Pollution

The contamination of the natural environment with harmful substances or energy, leading to adverse effects on living organisms and ecosystems.

Externality

An economic side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in market prices, either positively or negatively.